Ball is a manufacturer of metal and plastic packaging primarily for beverages and foods and a supplier of aerospace and other technologies and services to commercial and governmental customers. Ball Corp. has a market cap of $4.62 billion; its shares were traded at around $49.16 with a P/E ratio of 13.4 and P/S ratio of 0.6. The dividend yield of Ball Corp. stocks is 0.8%. Ball Corp. had an annual average earning growth of 17.1% over the past 10 years. GuruFocus rated Ball Corp. the business predictability rank of 4-star.
Highlight of Business Operations:Actions we have taken in the second quarter of 2009 to reduce headcount in our metal beverage packaging business resulted in a pretax charge of $3.3 million ($2 million after tax) for severance and other employee benefit costs. Results for the first six months of 2009 also included the restructuring charge of $5 million ($3.1 million after tax) for accelerated depreciation in connection with the closure of a North American metal beverage can plant.
Segment earnings were $64.8 million in the second quarter of 2009 and $95.7 million in the first six months of 2009 compared to $77.2 million and $125.2 million for the same periods in 2009, respectively. While this quarter s sales volumes were consistent with those in the prior year comparable period, earnings in the second quarter of 2009 were negatively affected by $7 million due to the impact of foreign currency translation, both within Europe as well as when the euro is translated to the U.S. dollar, with the remaining decrease primarily due to higher inventory costs. Year-to-date results trended with those of the second quarter, with the adverse effects of foreign currency translation reducing earnings by $13 million compared to results in the six-month period in 2008, with the remaining decrease due to inflated inventory costs partially offset by better commercial terms in some of our contracts.
Excluding applicable business consolidation costs for 2009 and 2008, segment earnings of $7.8 million in the second quarter of 2009 and $11.4 million in the first six months were higher than prior year earnings of $5.7 million and $10.5 million for the same periods, primarily due to better commercial terms and improved operating performance, including benefits from the plant closure in the second quarter of 2008.
Segment earnings were $14.8 million in the second quarter of 2009 compared to $22.7 million in the same period of 2008 and $29.4 million in the first six months of 2009 compared to $37.6 million in 2008, excluding a pretax gain of $7.1 million on the sale of a subsidiary in 2008. The drop in earnings from the same period in the prior year and year-to-date was primarily attributable to increased profitability in 2008 due to risk retirement on several fixed price programs that did not occur in 2009.
Selling, general and administrative (SG&A) expenses were $77.9 million in the second quarter of 2009 compared to $78.5 million for the same period in 2008 and $153.1 million in the first six months of 2009 compared to $160.1 million in the first six months of 2008. This year-to-date decrease in SG&A expenses was due to lower general and administrative costs in the aerospace and technologies segment of approximately $3.1 million; less research and development spending of $1.9 million; favorable mark-to-market adjustments of derivatives of approximately $3.7 million, lower accounts receivable securitization fees of $2.4 million, and $2.1 million of other miscellaneous net cost reductions. These reductions and favorable adjustments were partially offset by an increase in employee compensation, including incentive compensation plan costs, of approximately $6.2 million.
Consolidated interest expense was $24.7 million for the second quarter of 2009 compared to $34.7 million in the same period of 2008 and $50.5 million for the first six months of 2009 compared to $70.9 million for the first six months of 2008. The reduced expense for both periods in 2009 compared to those in 2008 was primarily due to lower interest rates on floating rate debt, and a lower euro compared to the U.S. dollar.
Read the The complete ReportBLL is in the portfolios of Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.